Real estate investors and analysts told Bloomberg Markets where they would look for the best deals in the region this year. Their responses have been edited for length and clarity.
John Saunders
Managing director and head of Asia Pacific real estate at BlackRock Inc.
The sudden moves from near-zero interest rates have induced some distress for overleveraged owners, prompting some tightly held assets to move on to the market. In this context, we continue to see strong structural tailwinds in industrial and logistics, particularly in inner-urban locations where land is scarce and supply is constrained. For these APAC logistics markets, there is exceptionally strong demand, initially from e-commerce requirements, but also increasingly to diversify and strengthen struggling supply chains. We are seeing strong occupancy levels and robust above-inflation rental increases, notwithstanding an unfolding global economic slowdown.
Louise Kavanagh
Chief investment officer and head of Asia Pacific real estate at Nuveen
Our key area of opportunity for Asian real estate is in the Singapore office market. Singapore continues to present itself as a landlord-favoured office market, which is evident from the tight vacancy. The broad-based office leasing demand from various industries helps Singapore to be the leader in the region. It has seen strong growth of family offices and offshore asset management companies establishing their hubs in the city given its business-friendly offerings, favourable regulatory environment and commitment to geopolitical neutrality. There is also growing demand from legal and professional services as the city has been one of the world’s leading dispute resolution hubs. Its strategic location in Southeast Asia has made Singapore the gateway for companies to tap the rise of Southeast Asia.
Goodwin Gaw
Chairman at Gaw Capital Partners
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Hospitality is the most interesting from a more optimistic point of view. There’s still more middle-class income being generated in India and China. They all like to travel, and Asia offers a lot of playing grounds for hospitality. The sector has been under pressure for quite some time during Covid. There are many family-owned hospitality assets; when they have been starved of cash flow for a couple of years, it’s hard for them to survive, especially against rising interest rates. So there could be more opportunities in that sector. Opportunistically, hospitality probably has the highest return potential in the short term just because of the significant correction and also a significant bounce back with the Covid restrictions being lifted.
Chiang Ling Ng
CIO, Asia at Hines
We label Australia as a key target market. It’s probably the market that has seen the most dislocation in cost of debt [and has been] the fastest to react to the global economic environment. Australia is seen as a much more resonant, sustainable geography. If they have the opportunity, many people would like to relocate there. It has a sizable base to absorb more people. We have actually established something called a build-to-rent strategy in Australia to tap into that future when affordability across the globe has become a social problem.
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Henry Chin
Head of research, Asia Pacific at CBRE Group Inc.
I’ve got a few contrarian views. No. 1: Don’t buy. In the first half of the year, try to sell. Particularly try to sell your multifamily and logistics. If you made the investment two, three years ago, the capital rate has dropped significantly, so it’s time to realize your return. Secondly, I want to talk about mainland China. You can see that global investors are really not keen to buy mainland China. But in my mind, China does have a strong medium- to longer-term growth [outlook], particularly Shanghai and Beijing. We love business parks, we like office buildings, even in retail there will be some strong recoveries given the recent Zero Covid policy abandonment. And then the third contrarian view is retail. In our view, return to office is very prominent in Asia Pacific and retailers are continuing to expand, so all of the gateway cities’ prime retail areas are one of our contrarian picks.
Pamela Ambler,
Head of investor intelligence, Asia Pacific at Jones Lang LaSalle Inc.
Logistics is the one area overall in Asia where there’s not nearly enough supply to meet the upcoming demand. When we look at vacancy rates for the major cities—like Sydney, Melbourne and Hong Kong—it’s oftentimes less than 1%. That just goes to show how much demand there is. Even though we’ve moved beyond the Covid era, the consumer behaviour of e-commerce and buying online is not going away. If you look at Asia compared to North America, there’s still a lot of room for growth in terms of the penetration rate. We’re far from reaching saturation in e-commerce growth. To support that, you need the infrastructure, which is very much logistics driven. On top of that, the logistics infrastructure that exists in many of the Asian markets is quite outdated. A lot of that requires refurbishment and redevelopment and therefore that takes some of the supply that should be available off the market.
